In the surreal tropical politics of contemporary Malaysia it is good business sense to use government funds to make loss-making property investments in order to enrich personal bank accounts. Recent revelations in the UK based Sarawak Report allege that Prime Minister Najib Razak did exactly this: shoveling hundreds of millions of dollars from the state sovereign wealth fund, 1 Malaysia Development Berhad, into his personal offshore account, whilst the fund that Najib inaugurated, after he became PM in 2009, accumulated losses of $(US)11 billion. Najib is not alone in practicing this Malaysian version of creative accountancy. Another government fund, Mara Holdings, has paid over the top prices for Australian real estate: its board of investors skim off the difference between asking price and what the company pays.
Excluded from this gravy train, former PM Mahathir called upon Najib to resign. The exposure of the extent of government corruption casts doubt not only on Najib’s survival, but also that of the ruling United Malay National Organisation. As a result, the current crisis has not only revealed the kleptocratic practice of a political elite, but also how social media, acting outside the state-policed, mainstream media, can expose the limitations of Malaysia’s authoritarian democracy. The manner in which the ruling party has been accustomed to wield its authoritarian grip and the way that grip has weakened is central to understanding the current crisis. Since independence, UMNO, in alliance with smaller ethnically based Chinese and Indian parties, has overseen national development through a Barisan Nasional (National Front) alliance. However, development in the majority, ethnically Malay interest has incurred political and economic costs. Under former PM Mahathir’s long dominance of the party state from 1981-2003, UMNO determined resource allocation and redistributed assets, where minority Chinese, and to a lesser extent Indian business interests, had prevailed. Under Mahathir’s guidance UMNO’s New Economic Policy redistributed socio-economic goods towards the economically deprived majority Malay community and through this ‘constructive protection’ created a modern ‘Malaysian’ identity.
The NEP nevertheless transformed resource rich Malaysia from a commodity based, agricultural economy of six million people into an urbanised manufacturing economy of twenty seven million with a per capita GDP of $(US)10,800 by 2015. In the process, the Malaysia Incorporated model co-opted Chinese owned conglomerates into UMNO business politics, entangled business with politics, whilst the expanding and ethnically Malay bureaucracy developed an institutional aversion to public scrutiny. To ‘lubricate and stimulate the economy’ required the party’s omniscient vision.
The malleability of the constitution and the money politics that became inseparable from the Malaysian electoral process reinforced single party rule. The capacity to dominate the multiethnic Barisan Nasional coalition in the Malay interest remains central to UMNO’s past and present political thinking. As Mahathir observed in 1971, Malaysia’s internal politics were ‘racial politics’ and its evolving democracy one guided by the elite ‘to ensure that the mutually antagonistic races of Malaysia will not clash’. To sustain this oligarchical despotism, UMNO eroded judicial independence, whilst increasing the authority of the party in general and the PM in particular.
Mahathir was largely responsible for this evolution and, like his successor, Najib, cultivated close and lucrative business links. The fact that two of his sons are billionaire CEO’s of state linked conglomerates whilst another son, Mukhriz, is well placed to assume the Presidency of UMNO should Najib fall, renders Mahathir’s criticisms of current government practice somewhat ironic. In other words, the current 1MDB scandal is not something new. In fact, the current crisis reflects the slow motion collision of the Malaysia Incorporated model and its networks of patronage and nepotism with the social media realities of the online world.
The first intimation that all was not well with UMNO’s authoritarian political consensus came in 1997s Financial Crisis, which caused a rift within the UMNO elite between Mahathir and his deputy Anwar Ibrahim. Anwar called for Reformasi to democratise the Malaysian political process and undermine its ‘mute syndrome’.
The political crisis led to the six year imprisonment of Anwar, then the emergence, after his release in 2004, of a functional opposition: his new Keadilan party, the Chinese Democratic Action Party and the Pan Islamic Party in a Pakatan Rakyat (Community Pact). This unstable alliance came close to winning both the 2008 and 2013 general elections. Najib won only by a well-established practice of vote buying. Indeed, his alleged pilfering of the 1MDB fund financed UMNO’s costly campaign.
Neverthless, the dubious 2013 electoral victory eroded UMNO’s legitimacy and exacerbated communal tensions.UMNO played the racial card, exploiting the ethnic and religious differences between the secular Chinese DAP and PAS’s commitment to hudud (sharia law). At the same time, Najib resumed the perennial persecution of Anwar: the High Court found him guilty of sodomy; a ‘crime’ that incurred a further five year sentence. The opposition disintegrated.
Yet the social media exposés concerning Najib, his stepson and his wife, Rosmah, only exacerbate Malaysia’s political travails. In his vitriolic campaign against Najib, Mahathir also referred to the 2006 murder of Altatunya Shaaribuu, an exotic model and interpreter. The case is a heady mixture of sex, kickbacks and submarines. Yet even if Najib resigns, UMNO rule would continue with a leading role for Mahathir’s son, Mukrhiz.
The West has adopted a complacent attitude to recent revelations. The Commonwealth failed to send observers to the 2013 election. Indeed, when Nick Xenophon tried to observe proceedings, he was refused entry without protest from our government. Looking eastward for growth, David Cameron will shortly visit and praise Najib’s ‘moderation’. Meanwhile, Najib employs expensive British consultants to ‘rebrand’ UMNO’s image and craft his response to recent allegations. As Anwar’s daughter opposition MP Nurul Izzah observes, the west sends the wrong signals, whilst the opposition’s only recourse is social media.
UMNO’s post modern version of oriental despotism is highly divisive. ‘Once UMNO loses’, as Mahathir observes, ‘it cannot be rehabilitated’. The fact that Commonwealth governments prefer trade deals to encouraging the rule of law means Mahathir may have little to fear.